Isn't this all referring to the "R&D tax credit"? My understanding of the word 'tax credit" is that any labor that could be classified as R&D would essentially be funded by the government. When this came out I thought "what a scam" because companies were going to develop their next-gen products anyway, but now some of our work could qualify as "R&D" and basically be free to the company. If my interpretation was correct, that would explain why big tech companies pay so many people so well - they weren't actually paying them at all, the government was. Even though I may benefit from that, that's not how I think it should be.
OTOH, I'm not a biz guy but I was under the impression that paying employees was an expense anyway and would be deducted from revenue and not taxed. How is R&D different?
> Isn't this all referring to the "R&D tax credit"?
No. The terminology is confusing. Section 174, specifically point 3, classifies software development as R&E as of 2022 and requires amortization over 5-15 years. This prevents software engineering salaries as a standard business tax deduction. This has nothing to do with the R&D tax credit (section 41).
>> Congress failed to extend a key tax provision last year allowing companies to fully expense research & development costs in the year incurred, a blow to big corporations that had lobbied for it.
Like the quote above says, it's about expensing costs. It has nothing to do with credits. R&D credits are a thing, but a thing we are not talking about!
OTOH, I'm not a biz guy but I was under the impression that paying employees was an expense anyway and would be deducted from revenue and not taxed. How is R&D different?